High demand for vehicles in the country is not only benefiting auto makers, but the same is also providing a fillip to the allied auto industries—tyre industry being one of them. After, French tyre giant Michelin had expressed its plan to invest Rs 4,000 crore over a period of seven years for setting up a truck tyre unit in the country, German tyre maker Continental AG is also eyeing to foray into the Indian tyre market.

Speaking to the press about the company’s plan, Helmut Matschi, an executive board member of Continental AG’s interior division, said that the Indian passenger car tyre market is being eyed by the company and that India is one of the most important markets for the company’s future growth prospects.

Rapid growth in passenger vehicle segment

Industry insiders believe the sheer growth potential of the passenger vehicle segment is a major driver for Continental AG to target this segment. According to Vision 2020 study jointly brought out by Automobile Component Manufacturers’ Association and Ernst & Young, the number of passenger vehicles in India is estimated to stand at 5 million units by 2015 and over 9 million units by 2020.

“Coming of Continental AG will not only intensify competition in the segment, but the same will also help to satisfy the domestic demand for tyres. Of late, Indian tyre manufacturers are finding it difficult to cope with increasing demand for tyres and entry of Continental AG will help auto majors to procure quality tyres, thereby bringing down the waiting period for vehicles,” comments Ashwin Modi, managing partner of Ashoka Tyres, a mid-sized tyre dealer in Hyderabad.

According to figures from Automotive Tyre Manufacturers’ Association, the turnover of the domestic tyre industry stood at Rs 25,000 crore in 2009-10. The figures also point to the fact that there are 36 tyre firms in India out of which 10 large companies account for over 95% of the overall tyre production in the country.

Arup Choudhury